January 17, 2021

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Biden Set to Call for Big Spending on Stimulus and Vaccines

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WASHINGTON — President-elect Joseph R. Biden Jr. on Thursday is expected to outline proposals for trillions of dollars in government spending to combat the coronavirus pandemic and its effects on the economy, with an initial focus on large-scale expansions of the nation’s vaccination program and virus testing capacity.

Mr. Biden will detail his plans, which he and his economic team have been honing for weeks, in an evening speech in Delaware. The efforts will cover the pandemic, the economy, health care, education, climate change and other domestic priorities, Brian Deese, the incoming director of the National Economic Council, said at the Reuters Next conference on Wednesday. Top Democrats in Congress have said in recent days that they are preparing for the efforts to span two bills.

“At this moment the president-elect feels that we need to move aggressively on both rescue and recovery,” Mr. Deese said.

America’s rebound from the pandemic recession has reeled into reverse, amid a winter surge of the virus and new waves of restrictions on economic activity in cities and states. The Labor Department on Thursday reported that 1.15 million Americans filed new unemployment claims in the first full week of the new year, a 25 percent increase from the previous week. Another 284,000 claims were filed for Pandemic Unemployment Assistance, an emergency federal program for workers like freelancers who do not normally qualify for jobless benefits. The nation shed 140,000 jobs in December, the department reported last week.

With millions still struggling, the initial stimulus package that Mr. Biden will unveil is expected to include money to complete $2,000 direct payments to individuals and aid to small businesses and local and state governments, Mr. Deese said. Others briefed on Mr. Biden’s thinking said he would also call for the first piece of legislation to include extending the duration of benefits for the long-term unemployed, which are set to expire in March for many workers, along with more help for renters.

And the president-elect is expected to call for an extension of supplemental federal benefits for unemployed workers. It is unclear whether Mr. Biden will call for an extension of the $300 weekly supplemental benefit currently in place or a return to the $600 per week benefit that was in effect for several months last year.

A congressional aide with knowledge of the plans said on Thursday that Mr. Biden would call for temporarily increasing the size of two tax credits — the earned income tax credit and child tax credit — in a manner that would effectively provide more cash from the government to low-income workers and families. Democrats in the House and Senate have pushed for expanding those benefits, which economists say could sharply reduce child poverty when many low-income parents have lost work and are turning to food banks for help.

Plans for the first package also include a significant increase in spending on vaccine deployment, testing and contact tracing, Mr. Deese said, and Mr. Biden will seek enough money to allow most schools to open, in an effort to increase labor force participation.

“We need to get the schools open,” Mr. Deese said, “so that parents, and particularly women, who are being disproportionately hurt in this economy, can get back to work.”

Transition team officials would not say on Wednesday how expensive Mr. Biden’s proposals were likely to be or whether he would announce a cost estimate on Thursday. Last week, Mr. Biden said he expected his full agenda would cost “trillions” of dollars.

The proposals in the second tranche are likely to be larger than the first, and Democrats plan to pay for all or some of them by raising taxes on corporations and the rich. The second package is expected to be centered on job creation and infrastructure, including hundreds of billions of dollars of spending on clean energy projects like electric vehicle charging stations, along with health care and education spending, Mr. Biden’s team and leading congressional Democrats have indicated.

The first bill is likely to be deficit-financed, in keeping with the Covid-19 relief bills that Congress passed last year.

Mr. Biden has said he will work to build Republican support for his plans, and he will need 10 Republican votes in the Senate to overcome a filibuster. But top Democrats in the House and Senate are preparing to pivot quickly to a parliamentary process known as budget reconciliation in the event they can get only a simple majority in the Senate. Republicans used the procedure to bypass a filibuster and approve Mr. Trump’s signature tax cuts in 2017.

Democrats on both sides of the Capitol — including Senator Chuck Schumer of New York, who will be the majority leader — have urged Mr. Biden to spend more than he had initially planned in the initial relief bill, people familiar with the conversations said.

Many Democrats in the House and Senate were pressing Mr. Biden this week to add items to the first bill, including targeted aid for restaurants and the temporary expansions of the earned-income tax credit and the child tax credit, which could cost just over $100 billion.

Congressional Democrats may include expansion of those credits in their legislation regardless of whether Mr. Biden calls for it. After Congress passed a $900 billion aid bill that did not include Democrats’ full priority list in December, Mr. Schumer told committee members to draft legislation that would include expansion of those tax credits, along with the additional direct payments and aid to state and local governments.

Democrats are also pushing Mr. Biden to include in his proposal provisions to automatically renew federal unemployment benefits and other aid until the unemployment rate falls to a specified level, in case Congress stops approving more rescue bills in the future.

Jim Tankersley

2021-01-14 12:56:44

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